The $22,000-an-Hour California Stem Cell Story: Rosy Expectations, Fuzzy Future

Evangelina Padilla Vaccaro
CIRM photo

Highlights
Trump and state bond issue?
More than 60 clinical trials projected

No therapies yet for general public
Siren appeal for reseachers
$2.2 billion out the door

Evangelina Padilla Vaccaro – a pink bow in her hair – was likely the first four-year-old ever to address the leaders of California’s $3 billion stem cell research program.

“Thank you,” she whispered. Her mother said more: "Thank you for keeping my family complete." 

Alysia PadillaVaccaro’s voice cracked, and tears flowed on that cool December morning at the meeting at an Oakland hotel.

Evangelina had much to be thankful for. She was born with “bubble baby” syndrome, which meant that she had no functioning immune system. Scientist Donald Kohn of UCLA cured her of the rare affliction by using her own blood stem cells to alter a troublesome gene. It was an experimental treatment not readily available to the public at large. Kohn’s research has been heavily supported with nearly $52 million by the state stem cell agency, known formally as the California Institute for Regenerative Medicine (CIRM) .

Evangelina’s story is just what Californians hoped for when they created the Oakland-based agency in 2004 via Proposition 71. Voters were told that stem cell therapies would ease afflictions found in nearly 50 percent of California families. The agency would create the “cures for tomorrow,” said then Gov. Arnold Schwarzenegger.

Since its first awards in 2005, the agency has given away money at a rate of $22,000 an hour, seven days a week, 24 hours a day. But it has yet to come up with a therapy that reaches the general public despite rosy expectations raised by the ballot campaign.

Today, the future of the program is unclear. The agency calculates that it will run out of cash in just three years. Whether it lives on could depend on the likelihood of another multibillion-dollar bond issue, not to mention the success – or the lack of success – of as many as 60 or more clinical trials and even the policies of the newly elected president of the United States, Donald Trump.

Stem cell therapies, it turns out, are expensive and difficult to bring to market, and their use may be

Shinya Yamanaka, UCSF photo

limited to a handful of diseases. On Monday, Nobel Prize winning stem cell scientist Shinya

Yamanaka said as much in an interview with Wallace Ravven of The New York Times. Because of a wide variety of constraints, he said, 

“We can help just a small portion of patients with stem cell therapy.”

In this context, heartwarming stories of patients such as Evangelina could be some of the strongest selling points for CIRM’s continued existence. They could fire the enthusiasm of voters and embolden businesses to partner with CIRM to bring therapies into the marketplace. The number of these emotional stories is increasing.

Evangelina was not alone at the CIRM meeting last month. Three more patients stepped up during a look at the agency’s performance. They included a 22-year-old man, also with a rare, immune-deficiency disease, a paralyzed 19-year-old man and a 70-year-old cancer patient -- all of whom had experienced major improvements during clinical trials. All told, the agency has pumped $113 million into the research that has benefited the four patients.

Evangelina’s story had special significance for Jan Nolta, head of the UC Davis stem cell program.

Jan Nolta, UCD photo

Nolta began her career working with Donald Kohn at Childrens Hospital in Los Angeles in early research involving the “bubble baby” affliction.

“CIRM has funded Don’s continued work in this area, and he has now functionally cured over 20 children with this disease,” she said in an email. “These kids now need no expensive medicine and treatments to keep them alive. They are functionally cured.” 

In Evangelina’s case, she was able to join her fraternal twin sister, Annabella, in living a normal childhood.

CIRM funding has also fueled the growth of the UC Davis stem cell program, which barely existed prior to creation of the stem cell agency. Today Davis has chalked up $129 million from the agency. “We have 16 stem cell or regenerative medicine clinical trials ongoing or recently completed, with more than 20 in the pipeline,” Nolta said.

Davis ranks as the No. 5 recipient of funds from the agency, trailing only such institutions as Stanford, $314 million; UCLA, $269 million; UC San Diego, $170 million, and UC San Francisco, $139 million.

Nolta is one of a number of researchers attracted by CIRM, lured by the cash and research environment created by the stem cell agency. program. She returned to California from Washington University in St. Louis. (See the full text of Nolta's remarks here.)

The appeal of the California largess was highlighted last week by George Daley, dean of the Harvard Medical School.  He was quoted in a lengthy piece about San Francisco Bay Area biotech written by STAT news service editor Charles Piller.

"'I’ve been looking at this from the outside, and franly have been very envious as a scientist based in Massachusetts,' Daley said. CIRM funds have turned many research centers in California, including UCSF, into world leaders in stem cell science, he said, adding: 'I heard the siren song of CIRM early. I considered making a move,' as did more than two dozen of his Harvard stem cell colleagues."

Since CIRM’s inception, it has awarded $2.2 billion to 853 California researchers and institutions. It estimates that it will award another $692 million before money runs out. This year it plans to give away $328 million.  (The awards are separate from the agency’s operational budget, which is capped by the ballot initiative and is about $19 million for the current fiscal year.)

Like most other recipient institutions, UC Davis has representation on the CIRM governing board. The California Stem Cell Report, which has monitored the agency since 2005, has calculated that about 90 percent of the agency’s cash has gone to institutions with links to past or present board members. Those members are barred from voting on awards to their institutions, but they do vote on the nature of the award rounds and approve the rules.

Concerns about conflicts of interest have long been a bugaboo for the agency. Last September,The Sacramento Bee reported that its former president, Alan Trounson, received $443,500 in total compensation after being named in 2014 to the board of directors of StemCells, Inc., of Newark, Ca. Trounson’s appointment to the company’s board came only seven days after he left the agency at the end of June 2014.

Randy Mills, FDA photo

Trounson was replaced by C. Randal Mills, who had been president of Osiris Therapeutics, Inc., of Maryland. Under Mills’ leadership, Osiris was the first company in the world to commercialize a stem cell drug, qualifying it for use in Canada.

Mills and the CIRM team – currently comprised of 48 people – re-crafted the agency’s objectives and established measurable benchmarks for success, winning board approval for what Mills called radical change. The results were summarized at last month’s board meeting and in the 2016 annual report. They included:

• Over the last two years, the agency has helped to finance 27 clinical trials and is looking for another 40 by 2020. (Clinical trials are the last stage before a therapy is approved by the Food and Drug Administration (FDA) for widespread use. Only one out of 10 conventional drug products emerge successfully from the trials.)

• More than 250 projects are currently being managed by the CIRM team.

• Twelve "world-class" research facilities have been created over the last 12 years.

• Three Alpha Clinics, intended to be one-stop stem cell centers, are in operation. A fourth is scheduled for this year.

• A $30 million stem cell "pitching machine" to speed clinical trials and help guide development through federal regulations began operations in 2016.

Nonetheless, development of stem cell therapies -- much less cures -- is a risky business and could be stymied by a number of issues. The agency itself acknowledges risk factors that include reluctance by businesses to invest in stem cell therapies and safety concerns, including the possible death of a patient in a clinical trial.

Mills makes a practice of presenting risk, an innovation at the agency, as he offers up new programs to its governing board. In the annual report, he quoted the poet T.S. Eliot as saying,

“Only those who will risk going too far can possibly find out how far one can go.”

The agency has experienced a few hiccups since Mills arrived. He acknowledges he is still working hard on attracting businesses to partner with scientists to turn their research into cures. 

An ambitious effort to create a unique, public-private, $150 million enterprise to develop stem cell therapies and cures stumbled late last year when no qualified applicants surfaced from the private sector. The agency hopes to recast the proposal in such a manner that it will find a partner.

One of those watching the agency since its beginning is Hank Greely, director of the Center for Law

Hank Greely, Stanford Law photo

and the Biosciences at Stanford.

He said in an email,

“CIRM has been spending money from Proposition. 71 for about 10 years. Once initial hopes of finding low-hanging fruit disappeared, this kind of slog toward treatments became inevitable.  (Although, in biomedicine, 10 years is not (Greely's boldface) a long time - see the 35 plus years it has taken gene therapy to get to the edge of an FDA-approved product.)

“The next few years should determine just how good California's investment has been. It is encouraging to see CIRM supporting so many clinical trials; it will be much more exciting when – and I do expect ‘when’ and not ‘if’ – one of those trials leads to an approved treatment.” 

John M. Simpson of Consumer Watchdog of Santa Monica, Ca., has also observed the agency for years. He said in an email,

“CIRM’s fundamental problem is that supporters of Proposition 71 wildly oversold what passage of the measure would deliver. Voters were led to believe that miraculous cures were just around the corner if only the proposition passed.

“CIRM-funded research has made important contributions to science, but has yet to deliver what voters were promised,” Simpson said. He added that agency management has improved under the regime of CIRM Chairman Jonathan Thomas and Mills “and the most blatant conflicts of interest were mitigated after the scathing Institute of Medicine report.”

In 2012, the highly respected Institute of Medicine, in a $700,000 report commissioned by the agency, recommended sweeping changes at CIRM to deal with conflicts of interest, its dual executive arrangement and the composition of its governing board. The CIRM board initially greeted the report coldly but made some changes to deal with the critical findings.

California patient advocate Don C. Reed, who campaigned for stem cell research long before CIRM surfaced, however, hailed the agency's work as already saving lives and creating hope for millions. He said in an email it was a "quiet triumph" that can be built on. (See here for full text.)

Simpson, who was heavily involved in development of the agency’s intellectual property policy,

John M. Simpson
 Consumer Watchdog photo

raised questions about the failure of the agency to generate the $1.1 billion in royalties for the state promised by its backers. Simpson said,

“The CIRM annual report cites the number of ‘inventions’ CIRM has funded — more than 180.  What share of royalties have taxpayers received as a result? Anticipated revenue from CIRM-funded inventions was a big selling point for Proposition 71.”

(See here for the full text of Simpson's comments.)

 Ironically, another selling point for the ballot measure came inadvertently from former President George Bush, who had restricted federal funding for human embryonic stem cell research. Backers of the ballot measure said it was needed to compensate for Bush’s action. His restrictions were lifted by President Obama. But many researchers are worried that the Trump administration will once again limit federal support for stem cell research.

Stanford’s Greely said,

“The election of Donald Trump and the continuation of a Republican-controlled Congress could create an increased need for extending CIRM.  If the federal government pulls out of some research on basically religious grounds, California may want to step in again.  It depends both on exactly how restrictive the federal government becomes and, more subtly, on how promising the stem cell trials appear.

“I suspect some federal funding restrictions are inevitable but their scope is unpredictable. As to the trials, if they are tremendously exciting, private funds might take over; if they flop, state funds may not be appropriate.  But if the results are very promising but not spectacular, more state funding might be invaluable.” 

(For more on a possible bond election and Trump's position, see here, here, here and here.)

Simpson has another view. He said,

“No doubt CIRM-funded research has made some important contributions to scientific knowledge. The results, however, in no way justify another bond issue to fund the agency.  If CIRM continues after the current funds run out, it should be financed like any other state agency— out of the state’s operating budget approved by the Legislature on annual basis. CIRM’s operating budget could also be augmented by private contributions.”

Mills avoids public discussion of such things as bond measures. But at a meeting last fall, he likened the research program to a “giant flywheel.”

“It takes a long time to get started, and you move it imperceptibly. Once that thing gets turning, it's almost impossible to stop.”

(Editor's note: A shorter version of this story can be found in the print edition of The Sacramento Bee for Jan. 17, 2017, and also on The Bee's website. The full text of various comments follows this story, which also has links to them. Greely's complete comments were included in the article above.)

(On Jan. 19, STAT news carried a lengthy piece on the agency that said it was slow in financing clinical trials, a major factor that has hampered development of a therapy.)

(An earlier version of this item also incorrectly stated Evangelina's age.)

Text of Nolta's Comments

Here is the full text of the remarks made by Jan Nolta, head of the stem cell program at UC Davis, for the overview piece today on California's stem cell agency.

"CIRM is making fantastic progress, with numerous stem cell therapies in clinical trials throughout California. The Major Facility Institutes that CIRM built in its earlier years are now thriving centers, each is a hub for stem cell and regenerative medicine therapies in its own region of the state. Currently at UC Davis we have 16 stem cell or regenerative medicine clinical trials ongoing or recently completed, with more than 20 in the pipeline.

"As one dramatic example of cures funded by CIRM:

"As you may know, I started my career as the first technician and graduate student for Donald Kohn, MD, at Children’s Hospital Los Angeles. Together our team did the initial hematopoietic stem cell gene therapy clinical trials for “bubble babies”- children with ADA deficient severe combined immune deficiency (SCID), back in the early 90’s. (refs = pubmed PMID:7489356, and PMID:9662367). We collected the baby’s umbilical cord blood right after it was born, added a good copy of the faulty gene in our clean room area in the laboratory, and Don transplanted the babies at day 3 after birth.

"CIRM has funded Don’s continued work in this area, and he has now functionally cured over 20 children with this disease. One of them, with her family, is featured in the recent “cures” video and in their annual report.

These kids now need no expensive medicine and treatments to keep them alive, they are functionally cured. 

"That is just one example of the power of stem cell therapy. There are many examples now of CIRM-funded clinical trials that are successful, and the numbers of people who are cured grow each day.

"There is so much potential for making a difference for patients who do not have other options through conventional medicine. It is a truly exciting time to be in California!"

Text of Don Reed's Comments

Here is the full text of comments from patient advocate Don Reed on the current state of the California stem cell agency. He offered them as part of the reporting process for the overview of the agency which can be found here.

THE CALIFORNIA STEM CELL PROGRAM: A Patient Advocate’s Viewpoint

By Don C. Reed

In its ten years of active existence (lawsuits blocked its funding for the first two and a half years) the California Institute for Regenerative Medicine (CIRM) has saved lives, eased suffering and brought the realistic hope of cure to millions.

Children with the “Bubble Baby” disease have had death sentences commuted and are now living healthy lives. Paralyzed young men have recovered hand and arm function. Blind people have begun to see outlines and colors, where there was only darkness before.

 It is a quiet triumph: not flashy or fancy: but every step is carefully documented, reliable, repeatable, so it can be built upon.

When CIRM began, the obstacles against us were so tremendous one scientist predicted we would be lucky to bring even one stem cell therapy to FDA-approved clinical trials. Instead, more than two dozen conditions have either begun human trials, have completed them or are expected to begin within six months.

I remember twenty-two years ago, when my son Roman was first paralyzed. The doctors gave us no hope, saying there was nothing that could be done. Today, there is plenty we can do, and California is doing it.

Thanks to the wisdom of the voters who said yes to Proposition 71, the citizens’ initiative which became our state stem cell program, CIRM has challenged many chronic diseases and disabilities--and is making steady progress.

As a patient advocate, I am eager for cure. But I know every step of the way will be difficult, as we systematically attack “incurable” disease. We need the faith of the farmer, who plows and plants his field, knowing it will take time for the seeds to open underground, and fight their way upward through the soil, to the sun.

Already, we are seeing the first fruits of cure: like the stem cell device to be implanted under a diabetic’s skin, after which it will distribute the insulin required.But I believe the best is yet to come. 

As legendary entertainer Al Jolson once said, “Hang onto your hats, folks—you ain’t seen nothin’ yet!”

Text of Comments from John M. Simpson of Consumer Watchdog

Here is the full text of the remarks from John M. Simpson made by email for the overview piece today on the California stem cell agency.

"It’s a slick (annual) report that allows CIRM to put its best forward as it its leadership tries to make a case for future funding, quite possibly another bond issue.  I’d be interested in knowing how much the annual report cost to produce and how many copies have been printed.

"CIRM’s fundamental problem is that supporters of Prop. 71 wildly oversold what passage of the measure would deliver.  Voters were led to believe that miraculous cures were just around the corner if only the proposition passed.

"CIRM-funded research has made important contributions to science, but has yet to deliver what voters were promised.

"Agency management has improved under the Thomas-Mills regime and the most blatant conflicts of interest were mitigated after the scathing Institute of Medicine report.

"The CIRM annual report cites the number of  'inventions' CIRM has funded — more than 180.  What share of royalties have taxpayers received as a result? Anticipated revenue from CIRM-funded inventions was a big selling point for Prop. 71.

"No doubt CIRM-funded research has made some important contributions to scientific knowledge. The results, however, in no way justify another bond issue to fund the agency.

"If CIRM continues after the current funds run out, it should be financed like any other state agency— out of the states’s operating budget approved by the Legislature on annual basis. CIRM’s operating budget could also be augmented by private contributions."

Latest Targets of the California Stem Cell Agency: $26 Million for Zika, Heart Disease and Much More

The California stem cell agency next Thursday expects to award nearly $26 million to 14 scientists to seek therapies for afflictions ranging from cystic fibrosis to Zika.

The awards have all been approved by the agency's out-of-state reviewers in a round called "Quest." The $3 billion agency's board is scheduled to ratify reviewers' decisions at a telephonic meeting next week. The board almost never overturns its reviewers' decisions.

The expected outcome of a Quest award is "a candidate therapeutic, medical device, diagnostic or tool that is ready for translational stage activities."

The application receiving the highest score, 95, is seeking to develop "CRISPR/Cas9 mediated FOXP3 gene editing in patient-derived hematopoietic stem cells as a cure for IPEX syndrome."

The review summary on the $1.1 million proposal said,

"Using CRISPR/Cas9 gene editing, we will insert a wild type copy of the FOXP3 gene into patient derived HSCs, enabling pre-clinical proof of concept data for clinical trials that could reduce IPEX patient pathologies. This work will the first-in-man demonstration of the curative potential of edited HSCs and will help maintain California’s lead position in stem cell research and cure."

IPEX syndrome is a rare disease that can lead to diabetes and severe enlargement of secondary lymphoid organs.

The Zika award received the second highest score, 93. It is aimed at determining the "the impact of the Zika virus during human neurodevelopment and to test a FDA-approved therapeutic candidate to treat Zika infection." The research is budgeted for $2.1 million. 

The largest award, $2.4 million, is aimed at a gene therapy to "regenerate heart muscle for the 23 million adult and pediatric patients with heart failure, for whom there are currently no disease-modifying therapeutic approaches."  It received a score of 88.

The cystic fibrosis application was scored at 85, which was right at the cutoff line for funding. The proposal is aimed at "genome editing to correct cystic fibrosis mutations in airway  stem cells."  The application sought $2.2 million.

The reviews of 14 applications can be found here along with the reviews of unsuccessful applicants who scored from 84 to 65. None of the names of the applicants have been released yet by the agency, which withholds the information until after the board ratifies the reviewer decisions. 

Here is a link to the agenda for the meeting, which includes remote locations throughout the state at which the public can participate in the meeting and speak to the board. The meeting is also expected to be available through an audiocast. 

Remote locations include Oakland, San Diego, Napa, Irvine, Los Gatos, Elk Grove and San Francisco. Specific addresses can be found on the agenda.  

More Than $300 Million to be Awarded: California Schedules 12 Stem Cell Agency Board Meetings This Year

California's $3 billion stem cell agency has scheduled governing board meetings every month this year as it plans to give away more than $300 million.

The board has two types of meetings: telephonic, which are usually routine, ratifying earlier decisions on individual grant applications, and face-to-face meetings, of which there are only four. The face-to-face meetings often involve approval of concepts for new award rounds or significant changes in rules or policies.

Readers interested in the agency should think about taking in one of the four face-to-face sessions. They provide an opportunity to chat informally with board members along with the top staff of the agency.

The telephonic sessions are run out of the agency's Oakland headquarters, another opportunity for face-to-face encounters with some CIRM board members and staff. 

In addition to board meetings, subcommittees meet off and on during the year, sometimes by telephone and face-to-face. But there is no set schedule.

In both types of meetings, they can be listened to via the Internet and also participated in via remote locations at board member sites. All the meetings can be found at this Web site, which provides transcripts of the sessions. Readers can sign up for automatic notifications at that site. 

Here is the rundown.

January 19th, 2017, Telephonic
February 23rd, 2017 Bay Area, face to face
March 23rd, 2017, Telephonic
April 27th, 2017, Telephonic
May 25th, 2017, Telephonic
June 29th, 2017, Bay Area, face to face
July 20, 2017, Telephonic
August, 24th, 2017, Telephonic
September 21st, 2017, Bay Area, face to face
October 26th, 2017, Telephonic
November 30, 2017, Telephonic
December 14th, 2017, Bay Area, face to face

Meeting dates and locations are subject to change

Update: Lengthier Look at CIRM Delayed

The lengthier look at the performance of the California stem cell agency that was promised earlier this week has been delayed for reasons beyond our control.

But it will be forthcoming, nonetheless. If you would like to add your thoughts to the piece, please direct them to djensen@californiastemcellreport.com.

California Stem Cell Agency Director Sheehy Named to SF Board of Supervisors

Jeff Sheehy at podium today at San Francisco announcement

A long time member of the governing board of the $3 billion California stem cell agency, Jeff Sheehy, today was appointed to the San Francisco board of supervisors.

Sheehy is the first HIV-positive person to serve on the powerful, five-member board, which directs the $9 billion budget of the City of San Francisco. Sheehy's appointment means that he will be on the San Francisco board until 2018 when he must stand for election.  He fills a vacancy created when a former supervisor, Scott Wiener, was elected to the state Senate last year. 

It is not uncommon for San Francisco supervisors to be elected to higher office, including U.S. Senator Dianne Feinstein. 

Sheehy will continue to be an AIDS patient advocate member of  the board of the stem cell agency, which he has served on since its inception. He is vice chairman of the grants review group, which makes the de facto decisions on the research awards handed out by the California Institute for Regenerative Medicine (CIRM), as the Oakland-based agency is formally known.  Sheehy is also chairman of the Science Subcommittee of the agency's board and is director of communications for the UC San Francisco Aids Research Institute.

Jonathan Thomas, chairman of CIRM, and vice chairman Art Torres, former head of the state Democratic Party, issued a statement saying they were "delighted" by the appointment. They said Sheehy has brought "intelligence, dedication and compassion to everything he does."

Sheehy was appointed to the supervisorial board by San Francisco Mayor Ed Lee. 

The 2016 Report From the California Stem Cell Agency: Challenges and Accomplishments

Stem cell agency's annual report cover

California's $3 billion stem cell agency has filed its 2016 annual report, which is chockablock with stories about people aided by stem cell research plus discussions of speed, clarity and clinical trials. 

The posting of the 20-page report on the agency's web site came 12 hours before the end of year on Friday.

"Challenges remain but new cures are emerging" was the headline on the document. "All in. All out" was how the agency's work was characterized.

Much of what was contained in the report has been written about previously on the California Stem Cell Report. But the annual report provides a useful and valuable summary of the agency's work for those interested in whether it is fulfilling the promises of the 2004 ballot initiative that created the agency, which is unprecedented in state history. 

Some of the notable numbers for the Oakland-based, 48-person agency, which is known formally as the California Institute for Regenerative Medicine(CIRM):

Over the last two years, the agency has helped to finance 27 clinical trials and is looking for another 40 by 2020.

More than 180 "inventions" have been chalked up.

More than 250 projects are currently being managed by the CIRM team.

Twelve "world-class" research facilities have been created over the last 12 years.

Three Alpha Clinics, intended to be one-stop stem cell centers, are in operation. A fourth is scheduled for this year.

A $30 million stem cell "pitching machine" to speed clinical trials and help guide development through federal regulations began operations in 2016.

Jonathan Thomas, chairman of the agency, said in the report, 

"However, there can be no greater return on our investment than the restoration of health. That is now occurring because of CIRM. Evangelina (featured on the cover), stricken with a previously incurable immune system disorder, is now cured. That’s right, cured. And we are working to quicken the pace at which this treatment is available to others. This is the promise of stem cell therapy."

The California Stem Cell Report will have a lengthier look at the agency later this week.

Holiday Break for California Stem Cell Report

This web site will go dark for the holidays. If we are lucky, it will resume on Jan. 3. Best wishes to all and Happy New Year.

California Stem Cell Agency Says Companies Seeking "Better Deal" in Unique, $150 Million Plan

Highlights
Five responses to plan
Application process is not a negotiation
Protection of state taxpayers paramount
More talks with companies planned

The president of the California stem cell agency, Randy Mills, yesterday said that the firms that responded to an ambitious proposal to create a $150 million public/private partnership were seeking to make a "better deal" than the agency had offered.

Mills said that the agency was "not going to give away something that is not in the best interests of the people of California."

Randy Mills, FDA photo

Mills was responding to questions raised earlier this week as a result of a report on this web site that
the proposal has hit a significant snag. The plan is aimed at creating a unique enterprise to speed development of stem cell therapies and to help establish California as a global stem cell powerhouse. The new company would be backed by a $75 million state loan (discounted to 50 percent payback)  with a matching $75 million coming from a successful applicant. The company would have the pick of agency research that did not already have a commercial partner.

The deadline for applications was Oct. 31. Up until yesterday, the agency had not even disclosed the number of responses to the request for applications(RFA). Nor had it gone beyond vague expressions of the issues troubling the proposal.

In a telephone interview with the California Stem Cell Report, Mills said that five responses were received on Oct. 31. But he said none were eligible for consideration because they did not meet the requirements of the RFA. He said the responses indicated that the companies viewed the application process as a "negotiation." Mills said "all kinds of terms" were proposed that were "different than in the RFA." He said,

"We put forward what we thought was a very good deal. The heads of the companies wanted to make a better deal."

Mills added,

"The deal is as good as the deal is going to get."

He said the $3 billion agency, known formally as the California Institute for Regenerative Medicine (CIRM), has to be willing to walk away if the deal is not appropriate.  He said the agency had a fiscal responsibility to taxpayers. "My investors are the people of California," Mills said.

Mills said, however, he was going to discuss the proposal further with those who responded to determine whether it was a matter of "terms or time." He said the proposal was innovative and unusual, posing challenges for both the companies and the agency.

Mills comments came as he was responding to questions raised by a reader of the California Stem Cell Report, Ed Snively, of El Centro, Ca. Snively is a longtime participant in local affairs in his area in Imperial County and has long followed stem cell agency matters.

He wrote in an email to California Stem Cell Report,

"Thank you, David, for this interesting observation on selective transparency by the agency. The comments by Mills regarding state regulatory compliance and taxpayer procedure acceptance were curious to me. I think Mills owes an explanation of his remarks to taxpayers. If this 'bold' plan violates the terms of the agency contract with the state and stakeholder/taxpayers then Mills needs to explain why that is. What he has done is make me think that something right on the legal edge is going on behind closed doors. I hate that in public agencies."

The California Stem Cell Report emailed the comments to the agency, asking if it would like to respond.

In the subsequent telephone interview, Mills said that he did not want the agency to be perceived as selectively transparent and that he had "no problem" in answering any questions.  He said that if his earlier comments were not clear that it was his fault, and he elaborated on the issues involved.

But under the agency's longstanding rules, it does not disclose the names of applicants nor does it disclose their applications -- only a review summary when they come before the agency's governing board for final action.  However, the terms of contracts with successful applicants are a public record.

'A Good Deal?' -- California Stem Cell Research, Rosy Expectations and Billions of Dollars

Highlights
$6 billion from the Golden State
$1.1 billion in royalties?
40 new clinical trials projected

"Are taxpayers getting a good deal?" That's the question that was raised nationally this week by the New York Times in connection with federally funded research dealing with life-saving treatments.

The same question can be raised concerning the roughly $6 billion, including interest, that California is spending -- unsuccessfully so far -- to generate a stem cell therapy that can be widely used.

In the case of the Times, the article by Matt Richtel and Andrew Pollack dealt with cancer immunotherapies and the soaring business and medical enthusiasm for the treatments. The two writers started their lengthy piece with the example of Kite Pharma, which they said "has struck gold." The company's stock has soared from $17 a share two years ago to about $50.

The Times wrote that excitement over the treatment speaks "volumes about the value of Kite's main scientific partner: the United States government."

California too is partnering with researchers and companies to develop blockbuster treatments, including immunotherapies. It has awarded more than $2 billion for research into possible treatments ranging from arthritis to extremely rare diseases that affect only a few thousand people.

The state is financing its research via the California Institute for Regenerative Medicine (CIRM), which is more informally known as the state stem cell agency. The agency has only $692 million left before its money for new awards runs out in 2020.

CIRM is funded by $3 billion that state borrows (bonds). The interest on the bonds roughly doubles the cost of the research compared to pay-as-you-go financing, which the federal government basically relies on. Like the federal government, CIRM depends on the private sector to actually bring potential therapies into widespread use.

The stem cell agency was created by voters in 2004 when they approved a ballot initiative. The campaign raised rosy expectations that cures were right around corner for afflictions that reached into nearly 50 percent of California families. And supporters also said that the state could expect as much as $1.1 billion in royalties. But royalties and commercial therapies have yet to appear.

The Times piece laid out arguments concerning federal research that apply equally to California's research effort, which is unprecedented in state history and which operates outside of the control of the governor and the legislature.  The Times piece said,

"Defenders say that the (public/private) partnership will likely bring a lifesaving treatment to patients, something the government cannot really do by itself, and that that is what matters most.

"Critics say that taxpayers will end up paying twice for the same drug — once to support its development and a second time to buy it — while the company reaps the financial benefit."

The Times article continued,

“If this was not a government-funded cancer treatment — if it was for a new solar technology, for example — it would be scandalous to think that some private investors are reaping massive profits off a taxpayer-funded invention,” said James Love, director of Knowledge Ecology International, an advocacy group concerned with access to medicines."

California's stem cell agency has yet to find a financial source to continue its work beyond 2020. Some talk has surfaced about another bond measure in 2018, but political observers give such an effort slight chance of success unless the agency can produce a therapy that will resonate with voters. If the Trump Administration, however, imposes restrictions on stem cell research, similar to those of the Bush Administration in 2004, that could create an impetus for passage of another measure.

Bob Klein, the first chairman of the stem cell agency, used to like to trot out the hundreds of scientific journal articles that were published by CIRM-funded researchers as a sign of success. "So what?" was the private comment to the California Stem Cell Report by one former CIRM staffer, alluding to the lack of impact of the journal articles. 

The agency's record, however, is picking up. Last week it cited 70 new projects, 10 new clinical trials plus a $30 million stem cell "pitching machine."  At at an emotional meeting, the agency's governing board also heard a mother thank the agency for saving the life of one of her children. Randy Mills, the president of the agency, is pushing hard and is looking for 40 additional clinical trials in the next several years. 

But the fundamental question remains: Will California taxpayers get their money's worth -- "a good deal" -- for the billions they are spending on stem cell research.   

Ambitious, $150 Million, California Plan for Stem Cell 'Powerhouse' Stalls

Highlights

$75 million state loan

Pick of stem cell research

Agency vague on problems

The California stem cell agency's bold plan to create a unique, $150 million, public-private company to speed development of stem cell therapies has hit a significant snag, stalling its progress indefinitely.

The agency, however, says it hasn't given up and will try to find solutions to the undisclosed problems.

Under the proposal -- first advanced a year ago -- California would provide a $75 million loan to a partner that would also provide $75 million. The goal would be to create a "powerhouse" that would likely be one of the landmark legacies of the $3 billion agency. The partner would be expected to pay back only 50 percent of the loan plus interest. The new company would also have the pick of the 94 percent of the agency research that doesn't already have a business partner. 

The public-private biotech partnership  -- dubbed ATP3 -- would be the first in state history and the first of such magnitude nationally.

The agency has been working for much of 2016 to recruit applicants and to address potential concerns. The difficulties began to surface last fall at the Oct. 31 deadline for applications. The agency declined to disclose to the California Stem Cell Report even the number of applications it had received. A spokesman said only that the agency was checking to see if they were "eligible."

The chairman of the agency, Jonathan Thomas, went public with slightly more information at last week's meeting of the agency's governing board.

He referred to a "number of applicants" that were involved. He said that issues still exist and that the application(s) that were submitted to the agency will not be given to the agency's reviewers as scheduled. Thomas said the request for applications may extended and some criteria adjusted.

Randy Mills, president of the agency, said later in the meeting that an effort would be made to make the plan "compliant with state requirements and palatable to taxpayers." He described it as an "ongoing challenge."

Mills said,

"We haven’t given up but we haven’t nailed it yet."

No public questions were raised at the meeting by 29-directors of the agency, which is officially known as the California Institute for Regenerative Medicine (CIRM).

It was created 12 years ago by a ballot initiative approved by voters and relies on money borrowed by the state(bonds). The ballot campaign indicated that stem cell therapies were close on the horizon. However, the agency has not developed a therapy for widespread use.

It estimates that it has about $692 million left for awards. The agency's funds are projected to run out in 2020. No additional funding is in sight.